How Profitable is the Turkana Oil Project?

InVhestia has been in existence for several years, the company was founded in the year 2012 and has grown from a company offering services in Kenya only, to one which is active and offering services in over 5 African countries. Apart from Kenya our brand has been felt in Uganda, Rwanda, Tanzania, Nigeria, Ethiopia, Zambia …

InVhestia has been in existence for several years, the company was founded in the year 2012 and has grown from a company offering services in Kenya only, to one which is active and offering services in over 5 African countries. Apart from Kenya our brand has been felt in Uganda, Rwanda, Tanzania, Nigeria, Ethiopia, Zambia and counting.

Other than geographical growth we have also realized over time that our services are not only useful in the private and public sector to answer purely commercial questions, but could also be quite useful in the public sector and the civil society space to contribute to pertinent debates which, in most cases, have a bearing on livelihoods on millions of persons.

In 2017 we launched our foray into this public and civil society space by deciding to commit resources to answer questions which to us looked to be interesting; questions which had a significant bearing on policy, law and eventually on cashflows to various arms of government and the population as a whole. Together with Open Oil, a Germany based company, we decided to work on a financial model on one of the oil blocks in Turkana. There had been lots of debate around how the revenues from the Oil discovered in Kenya were going to be shared, between the National Government, County Government and the Community. In all the articles we read we felt there was one thing missing, a financial model showing the impact of various options that one could review, make changes to and draw their own conclusions. Further there was the question of just how profitable these oil projects are; were they going to benefit the private oil companies at the expense of Kenyans?

File Photo of Oil Rig in Turkana County – The Star

The results to these questions are shared in our recently published report, Turkana oil field, Kenya Narrative Report, which can be accessed on this link. What is different about this report is that it does not only give the results of an exercise, it also publishes the financial model that was used to arrive at these conclusions. This is BIG since anyone interested in challenging our findings or seeking to answer other questions which we did not cover can easily do so by making changes on this FAST (Flexible Appropriate Structured and Transparent) compliant financial model.

While this is BIG for us we did not stop there. We have now worked with the Government of Kenya and that of Zambia on assignments by the Extractives Hub  to answer these kinds of questions and offer capacity building around financial modelling which is a critical piece to analyzing any kind of project, in this case mining projects.

Do enjoy the report and as always we welcome your comments.

Download Model

Authored by Stephen Gugu